Buyer-broker fees to be temporarily covered under VA loan benefits

Move made to keep veterans competitive in changing market, official says

The U.S. Department of Veterans Affairs (VA) has announced a new policy allowing some commission fees for real estate agents to be covered under its home loan program.

Veterans, active-duty service members and eligible spouses who use VA loans to purchase homes will now be able to use their VA loan benefits to pay for their real estate professional’s commission (the buyer-broker fee). Previously, borrowers with VA loans could not use the benefit to pay fees to real estate professionals hired to represent them during the homebuying process.

The change was necessitated by the settlement agreed to by the National Association of Realtors (NAR) upending the longstanding standard commission structure and rewriting how buyers and sellers pay agents. As part of the settlement, agents working with homebuyers will be required to enter written contracts with the buyers they serve, including an agreement that the buyer pays the agent a prearranged percentage of the purchase price if the seller doesn’t cover the commission.

It’s because of that potential increased expectation that homebuyers will pay for such fees that the VA decided to be proactive to make sure veterans aren’t negatively affected, according to Joshua Jacobs, undersecretary for benefits at the VA.

“We always want to put veterans and their families in the best possible position to buy the homes they want, and that’s what this update is all about,” said Jacobs. “Veterans using VA home loan benefits can now pay reasonable and customary amounts for certain charges — including commissions and other broker-related fees — thus ensuring that they remain competitive in the rapidly changing housing market.”

The policy change, according to a statement from the VA, is currently temporary. With the settlement’s effects not yet fully realized, the department will monitor how the settlement affects the real estate market to pursue more permanent rulemaking accordingly.

In the meantime, the VA also encouraged veterans and other military personnel to negotiate buyer-broker fees with their real estate professionals, including still asking sellers to cover buyer-broker fees at closing.

The NAR applauded the VA for making the change.

“The VA’s home loan guaranty is the only program that explicitly bans buyers from directly paying for professional real estate representation,” said NAR President Kevin Sears. “We applaud the VA for revising this policy and allowing veterans and active-duty service members the same advantages as other buyers in a competitive real estate market.” 


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